Property rents were down 0.6% in Australia in 2017
Property rental growth fell by 0.6% in Australia in 2017, the slowest since 1993 and came as the number of new homes being built increased.
For families reliant on the rental market, the deceleration in rents is welcome news, according to Shane Garrett, senior economist at the Housing Industry Association (HIA).
He explained that the slowdown in rental price pressures has been helped by the completion of large volumes of newly built homes over the last couple of years. Investors, both domestic and foreign, have been instrumental in delivering this additional supply.
Garrett also pointed out that the rate of rental inflation is well below the overall rate of inflation which rose to 1.9% during the final quarter of 2017, just higher than in the previous quarter.
‘It was also significantly lower than the increase in general housing costs, which grew by 3.4% over the year. This is predominantly due to rising electricity costs which rose by 12.4% over the 12 months. “
In Victoria the state Government has announced a shared equity scheme known as HomesVic which addresses the issue of housing affordability and aims to help young people get on the housing ladder.
The scheme will allow young people to purchase a home with the state Government providing up to 25% of the purchase price, reducing the size of the mortgage that must be taken out. When the house is sold, the Government recoups its share of the proceeds.
HIA figures show that the typical stamp duty bill on homes in Victoria has risen by 4,000% since 1982. With the median price of a Melbourne dwelling at $720,417 buying a house a pipe dream for many low young people. The scheme will be restricted to just 400 applicants.
There has also been a slowdown in the number of new homes being built. The latest official data from the Australian Bureau of Statistics (ABS) shows that the number of approvals in December fell by 39.2%.
However, Tim Reardon, HIA’s principal economist, pointed out that this came after a strong November and the average number of approvals in the final three months is consistent with levels of approval activity that have been seen throughout the year.
Looking at the figures quarter on quarter the fall was a more modest 1.7% and was 3.2% higher than the same quarter in 2016. Victoria and Tasmania were the only states that experienced growth in the month of December, up 2.5% and 3.1% respectively.
‘Victoria has been the fastest growing state in terms of population and it is encouraging that new housing supply in the state is responding to the strongly growing demand,’ Reardon said.
A breakdown of the figures shows that approvals fell by 35% in December in the Australian Capital Territory, by 12.9% in the Northern Territory, by 5.6% in New South Wales, by 2.4% in South Australia, by 1.3% in Western Australia and by 0.8% in Queensland.